IndyWales & Postal Services

When I first wrote about this back in 2012 it turned out to be the most read post I’ve ever done – though there might be other reasons behind that.

Nonetheless, due to big changes to how postal services are run and delivered since then, I’ve decided to look at how postal services might be delivered in an independent Wales again.

Postal Service = Universal Service

There are two key things which make any postal service viable:

Universal Postal Union (UPU) – The UPU was established via the Treaty of Bern in 1874 in order to create a single global postal service, which means you only have to pay a single fee to a single provider to send a piece of mail anywhere on Earth. Before the treaty, you would have to pay separate fees for separate legs to different national postal providers. To have a functioning postal service, Wales would have to sign up to the UPU and it’s paid for by buying credits ranging from one half to 50. The UK pays for 50 credits, but Ireland only pays 5, so Wales would be looking at 5 credits too.

Universal Service Obligation (USO) – There’s currently a legal obligation for an appointed provider (in our case, Royal Mail) to provide a “one fee, goes anywhere” service and at least five collections and deliveries per week (though it’s six for letters, five for parcels in the UK). In addition, there are obligations relating to recorded deliveries, insurance of mail and its contents, and providing free postal services to registered blind people (more info here).

How the current postal service works

The Royal Mail – The largest postal company in the UK, designated responsible for collecting and delivering letters and parcels (via its Parcelforce brand) under the USO. They also undertake business/private mail contracts and deliver unsolicited promotional mail. The Royal Mail, which was formally a government agency, was privatised in 2012 and floated on the London Stock Exchange in 2013. The UK Government retained a stake of 30% until it was completely sold-off in 2015, raising £3.3billion – though there are suggestions the Royal Mail was sold at an undervalued price.

The Post Office – A state-owned company that provides retail postal services as well as its own postal banking services. It’s been a heavy loss-maker, but at the end of 2017 was said to be “close to breaking even” after a programme of office closures, down-sizing and co-location. Due to the fact it offers accessible financial services in areas that have lost bank branches, this closure programme proved contentious. Only 300 post offices are run directly by Post Office Ltd (“Crown Offices” – pdf) – of which 19 are in Wales (by my count) – with the rest run by franchisees.

Business & Private Couriers– There are a number of private companies (international and domestic) offering services to businesses and the public, mainly in parcel delivery but also some regular mail/letters too. While Whistl attempted to carry out a full postal service in parts of England (collection, sorting, distribution, end-to-end delivery), the Royal Mail’s effective monopoly on “last mile” deliveries hindered it.

The Post Regulator – Ofcom is responsible for regulating postal services in the UK, while Consumer Focus is responsible for protecting consumer interests. Their main duty is to make sure the USO is upheld. They can also impose service conditions on other delivery and postal companies.

According to Ofcom’s 2017 annual communications report (pdf p80), the Welsh use postal services more often than any other part of the UK, with 81% spending up to £20 a month on postage and 3% saying they spent more than £50 – higher than the UK average.

Welsh adults also receive more post than the UK average and are generally more satisfied with the Royal Mail than the rest of the UK. Despite this, more Welsh people complained about misdirected mail and missed deliveries than the rest of the UK.

Trends towards the greater use of e-mail and texting in Wales are broadly in line with the rest of the UK.

Models for a Welsh Postal Service

(Pic: Royal Mail)

Maintain Current Postal Services

Things continue as is. The Royal Mail will still be there, the Post Office will still be there. The only thing that would be different is Welsh stamps (which would presumably be kept at the same price or equivalent as in England) and Wales would either jointly-regulate postal services with England (via Ofcom) or we regulate them ourselves, whether through the Welsh Government (via regulations) or a Welsh equivalent of Ofcom.

The obvious advantage is that there would be minimal to no disruption and people are unlikely to notice any difference. The disadvantage is that if, for example, Wales wanted to nationalise postal services or the Post Office, we wouldn’t be able to and it’s likely that England’s needs would take priority over Wales in business decisions.

A publicly-owned Welsh Postal Service (“Post Cymru”)

Wales nationalises Royal Mail and Post Office operations within our borders, or establishes a separate majority state-owned company – presumably not-for-profit on the Dwr Cymru model – to run postal services. That company could, in turn, be part-owned by another company (i.e. Royal Mail, TNT, FedEx, UPS) or investors and would become the designated postal company responsible for the USO as regulated by the Welsh Government.

The advantage is that Wales would have full regulatory control over postal services and would have a national asset that would be entirely dedicated to meeting Welsh needs. The disadvantage is that it would probably cost a significant sum to set up; we would probably have to buy-out the Post Office’s and Royal Mail’s assets in Wales (sorting offices, vehicles, pensions etc.) to fold into Post Cymru. It’s hard to estimate how much that would be, but it would likely be tens of millions of pounds at the very least.

A privately-owned Welsh Post Service

As above, except “Post Cymru” would be a private company run along the same lines as the Royal Mail. Wales would retain full regulatory control, but there would always be a risk of the company being taken over by a larger one (i.e. Royal Mail, TNT) or running into financial problems which could require a government bail-out.

Regulator-only Model (full privatisation)

In this model, the postal market in Wales would be opened up to whoever wanted to take part, with the Welsh Government (or a Welsh equivalent of Ofcom) only acting as a regulator (i.e. setting price limits, ensuring services maintain standards).

It could lead to competition between different postal companies which could see costs to consumers rising or falling with demand. The public and businesses will be able to pick and choose who to send their post with (so theoretically you could have three or four different post boxes provided in some communities). It would mean, however, that some communities may not be served properly if it’s deemed uneconomical (i.e. large parts of rural Wales) and the postal system would become confusing.

As there’s a natural monopoly on the delivery of “final mile” post (and due to the sparse population of rural Wales), as a relatively small market for post and deliveries the regulator-only model can probably be discounted.

Any of the other three options would have to be treated on their own merits, but I would lean towards a publicly-owned not-for-profit “Post Cymru”, with retaining the Royal Mail being the default option. There’s one small problem though….

Postcodes

Two swathes of Wales are served by English postcode areas. These include most of central Wales and parts of England served by Shrewsbury (SY), while Flintshire, parts of Denbighshire and Wrexham are covered by Chester (CH).

If Wales retained the existing postal system after independence, this wouldn’t matter. However, if there were a distinct Welsh postal system, then areas in England would need an English postcode and areas in Wales would need a Welsh one.

There are five possible solutions:

Create two new postcode areas – The areas in Wales covered by Shrewsbury (SH) could move to a postcode perhaps with Newtown as the postal town (NT), and northeast Wales could have Wrexham (WX) as the postal town.

Create a new postcode area for central Wales (NT) for areas currently covered by Shrewsbury; extend Llandudno (LL) to cover all of northern Wales.

Powys addresses could be covered by Llandrindod Wells (LD); Ceredigion addresses covered by Swansea (SA); either LL or WX for northern Wales

All of Powys and Ceredigion could be covered by Llandrindod Wells (LD) with either LL or WX for northern Wales.

Create an entirely new postcode system for all of Wales.Any one of the first four options ought to be relatively straightforward.

For the latter, Wales could develop a number-based postcode system (like in the United States), a new alphanumeric postcode system or a GPS-based system.

When Ireland adopted a new postcode system it cost €27million (£~24million) over ten years and such a system would no doubt require a massive public information campaign and cause unnecessary confusion – so keeping the system as close to the existing one as possible would be preferable.

Stamps

(Pic: Royal Mail)

Wales could issue its own stamps obviously, whether we retained Royal Mail services or not. I’m sure you all have your own ideas as to what would be on them – though the monarch’s head needn’t stay on them even if Wales retained the monarchy after independence.

A more technologically-advanced, but boring, alternative would be to see a complete switch to QR-code style stamps which you can currently buy online. In theory, the public and businesses could then print them off wherever they are.

Ideally, the price of stamps would be rounded to within the nearest 5p (which might make it a bit easier to remember how much a stamp costs).

The Post Office also provides basic bank accounts (for people who don’t have a commercial bank account), savings accounts and has even moved into insurance, mortgages, personal loans and credit cards.

There’s long been an ambition amongst some Welsh politicians to create a “People’s Bank”, particularly after the Great Recession. A Welsh postal service and Post Office network might be one way to do this.

A Post Bank could either be an integral function of “Post Cymru”, an expansion of the Development Bank of Wales (Banc), or even a separate company/brand run between “Post Cymru” and a larger commercial partner (similarly to how the Irish Post Bank was run between 2006-2010). Necessary controls could be placed on what services it could provide in order to minimise commercial risk-taking, whilst guaranteeing that rural areas in particular maintain access to banking services – perhaps even taking accounts from the Anglo-Scottish banks.

Some of its services could include:

Micro and commercial loans to local businesses and social enterprises.

Provide a front-of-house service for the collection of taxes and levies (TV Licence, Council Tax, Driving Licences, Passports) perhaps even forming the backbone of a Welsh Inland Revenue.

Postal Innovation

(Pic: Bath University)

What other ideas could we consider for Welsh postal services?

Self-Service Machines– Instead of having branches, postal services could be provided via machines. This could include cheque and cash deposits/withdrawals, postage & stamps, sending letters and small parcels. They’re already being rolled out at some Post Offices but theoretically, you could place them anywhere as long as there’s supervision – in a local shop, supermarkets, train and bus stations, for example.

Smart Lockers – How many times have you been out and missed a parcel delivery? Amazon and some other companies provide key-code lockers for pick up. Why couldn’t a Welsh postal service provide the same thing and charge logistics companies a small fee per-item to use it? It’ll make their job easier by cutting down on missed deliveries and give customers a choice. It shouldn’t disproportionately disadvantage rural areas if you put a locker in every village or have a consolidated parcel delivery system for rural areas.

Drone couriers – Amazon are already working on this, but it could be extended to domestic and business mail that’s going to be delivered within a certain radius or is otherwise urgent. You could theoretically have “one-hour” delivery, but the technology will need to be foolproof, able to withstand Welsh weather and closely monitored. Larger drones could be used to transport multiple items between local distribution hubs and this could be a more cost-effective way to deliver items in rural areas, particularly to isolated buildings like farms.